Income Streams for Banks and Bank Performance

This research paper investigates the impact of income streams such as fund income and fee income of a bank on bank’s performance. A database of 74 banks of public, private, and foreign banks is studied over a period of 2005 -2014 and data is collected from the CMIE Prowess. The fund income and fee income are two income streams for the bank. And bank performance is measured in terms of return on equity (ROE) by controlling return on assets (ROA). The relationship of fund income and fee income is studied using multiple regressions over the period of study. The focus is that in today’s era of competition, income streams of bank are changing. The study reveals that fee income and fund income are moderately positively correlated with return on equity.

Keywords: Return on equity, return on assets, fund income, and fee income.